Stuy Town lenders try to stop foreclosure

Pershing Square Capital Management and Winthrop Realty Trust filed a request today with a state appeals court in Manhattan to stop the Oct. 4 foreclosure planned by senior debt holders at the Stuyvesant Town and Peter Cooper Village residential complex, Edward Weisfelner, a lawyer for Pershing and Winthrop, told Bloomberg News. Pershing, a hedge fund run by William Ackman, and Winthrop, both junior debt holders, lost a bid last week to pursue their own foreclosure sale for the property. A lower court judge issued a preliminary injunction saying they may only proceed if they first pay senior creditors the $3.67 billion that they are owed under the first mortgage. If the court grants a stay, Pershing and Winthrop will still have to argue the merits of their appeal. Senior lenders will respond to the appeal Sept. 24 and the appeals court will decide by Sept. 29 whether to stay the planned foreclosure. Meanwhile, CW Capital Asset Management, the special servicer for the senior mortgage, is seeking to move forward with its foreclosure after Stuyvesant Town owner Tishman Speyer Properties defaulted on a $3 billion senior loan and $1.4 billion of junior debt. CW Capital’s foreclosure would wipe out the investment by junior lenders, according to the filing. [Bloomberg via Crain’s]